On Friday, Barclays (LON:BARC) initiated coverage on VICI Properties Inc. (NYSE: NYSE:VICI) shares with an Overweight rating and set a price target of $36.00. The new coverage comes as Barclays analysts see the real estate investment trust's asset quality, geographic distribution, and economic productivity as grounds for a higher valuation compared to its peers.
VICI Properties' portfolio benefits from inflation-linked same-store growth and a clear path for external expansion. The analysts believe that the company's valuation premium has historically been justified but noted that it has recently shifted to a slight discount, which they argue is unwarranted.
The past year has seen investors concerned about a deceleration in VICI's growth opportunities due to fluctuations in the capital markets. Additionally, uncertainties regarding the renewal or extension of a significant master lease with Caesars (NASDAQ:CZR) Entertainment (24% of VICI's total rental income) have led to a disproportionate decline in the company's share price, according to Barclays.
Barclays' analysis suggests that even with potential future rent reductions under various scenarios, the current discount on VICI's shares does not reflect the true value of the company's lease agreements and overall business prospects.
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